The End of the Internet As We've Known It

Debating the merits (or lack thereof) of net neutrality is a waste of time. Not because it's a bad idea -- enabling equal broadband access for all is noble -- but because it's impractical. Net neutrality doesn't allow for managed services, and managed services are how telecom and cable providers will make money when the Internet becomes the primary vehicle for delivering voice, data, and video content around the globe.

What a smarter Internet can do
Make no mistake: The Internet is already taking traffic from the traditional telephone network. Researcher Dell'Oro Group says the number of VoIP lines served via broadband is on pace to grow 27% a year from 2009 to 2014.

That cheering you hear in the background is from telecom executives -- they want to do more business over the Internet. Last year, AT&T (NYSE: T  ) called analog telephony "relics of a bygone era," and is now supporting Skype on the iPhone. AT&T, Verizon (NYSE: VZ  ) , and Sprint Nextel (NYSE: S  ) are preparing their networks for the day when the Internet makes the public switched telephone network obsolete.

When that day comes, carriers will make their money from managed services that offer more than garden-variety Internet connectivity. Services such as teleconferencing or broadcast streaming, or perhaps web-connected TV.

Why net neutrality was a good idea
Net neutrality stands in the way. By definition net neutrality means a network can't favor one type of traffic over another. Whether by region, by provider, or by content, under net neutrality, distributors must remain, well, neutral.

This principle made sense in the early '90s. Bandwidth was precious, and unlike today, AOL (NYSE: AOL  ) and EarthLink (Nasdaq: ELNK  ) could be counted on to make a good living from access fees. Had either of them had the authority to choke off traffic for any reason, the Web as we've known it might have died an early death.

Today, AOL and EarthLink are barely relevant and bandwidth is plentiful. Web surfers that once suffered with 64K dial-up modems are today downloading as much as 50 megabits of data every second.

Net neutrality supporters will tell you that, with that much bandwidth available, there shouldn't be a need to shape traffic or "manage" web services. There's enough horsepower to go around. Web TV should just work.

If only that were true.

Remember: this is the Internet we're talking about, and despite rumors of it being a bunch of tubes, in reality it's a concatenation of servers, storage, wires, and wireless access points. The Internet's chaos is its strength -- there's no single point of failure -- but it also means service can be unpredictable.

Now imagine knowing that as a telco executive. Imagine seeing reams of data that says there's demand for TV over the Web, and for VoIP, and for video-on-demand. You want to offer these services widely, but you can't guarantee reliable delivery without prioritizing traffic. Yet net neutrality rules prohibit you from doing that. See the problem?

Focus the debate where it belongs
Politically, it's never good to be against any proposal that falls under the purview of the fairness doctrine, and supporters will tell you net neutrality is about fairness. We need rules to prevent carriers from deciding who gets to use the Internet, and how.

You know what? They're right.

But that's about the only courtesy I'll extend in this debate. So long as carriers are ensuring reasonable speed and access for all, in every region in which they operate, why shouldn't some traffic shaping be allowed? Managed services are a necessity for today's Web.

By "managed services," I mean are services that are built to deliver a certain level of quality of service (QoS). It's a technical term, referring to the throttling or enhancing of traffic in such a way as to ensure priority traffic reaches its destination as quickly as possible. Net neutrality policy leaves little room for such strategies.

Regardless, QoS is popular technology. Both Cisco (Nasdaq: CSCO  ) and Juniper Networks (Nasdaq: JNPR  ) make routers that embed QoS. And why not? QoS is the key to delivering advanced services over an inherently volatile network such as the Internet.

In the cloud computing era, either we consumers will adopt QoS equipment to manage VoIP calls and streaming in our homes and offices, or connectivity providers will do it for us, in the network, for a fee. Which sounds easier to you? If your answer is the latter, you're right.

Regulators and activists should take note. And wherever the net neutrality debate heads next, arguments should center on what consumers need in the cloud computing era. Almost everything else is a distraction.

That's my take. Now it's your turn to weigh in. Do you support net neutrality? Why or why not? Let the debate begin in the comments box below.

Sprint Nextel is a Motley Fool Inside Value pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy thinks neutrality is for Switzerland. Everyone else, pick a side.


Read/Post Comments (8) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 25, 2010, at 4:25 PM, duranliam wrote:

    This article positions net neutrality as an impediment to commerce, while completely ignoring the central issue.

    Net neutrality is the information age's equivalent to freedom of the press/speech. When Internet Service Providers are legally permitted to prioritize traffic, they will immediately sell that option for a profit. This means that content providers with more cash will be able to have their information moved through the internet more quickly. Speed is the key to success, and failure, with any internet related website or application. Websites that provide alternate news, information and perspectives but lack funding will load and display more slowly. That will result in frustration for people accessing those sites and will effectively inhibit access to non-bankrolled media.

    Net neutrality is needed to ensure that all media available through the internet is equally accessible regardless of economic, political or religious support. We already have too many Media Moguls (NBC, Fox, ABC, Conrad Black) whose editors screen out and present "news" that supports their agenda's and backers. We need to ensure that internet providers are not added to that list.

  • Report this Comment On August 25, 2010, at 5:04 PM, XMFShirKi wrote:

    Hi Tim,

    Thanks for your article! As always, you present a refreshing view. And I love your disclosure policy :-)

    However, I beg to differ with the main point. Net neutrality is still as big an issue today as it was in the 90s. After all, with the growth of available bandwidth came an explosive growth of the used bandwidth. Today we run our data to and from the cloud, our movies download or stream to us, and entire programming languages, heavy software, and even operating systems are downloaded in a manner of minutes. Of course, these operating systems happen to be GNU/Linux - Free Software, an operating system of the people, by the people, for the people. The same kind of people that will suffer if net neutrality becomes a think of the past.

    @duranliam, thanks for posting. Your characterization of NN as critical as freedom of speech and of the press, is precisely in line with my thoughts on this matter.

    -Shiri

  • Report this Comment On August 25, 2010, at 5:11 PM, nyceyez wrote:

    For those of us who've been designing mission critical centralized, distributed, every other type of network-centric computing under the sun since circa 1984, when the term "The *Network* Is the Computer" was coined, let me say that there's nothing new or compelling about this article.

    But, more importantly, the article is woefully and perhaps irresponsibly, not comprehensive... for any justifying argument in favor of a tired and/or rationed internet must, of necessity, also address the risks of predatory and monopolistic behavior. And you, the reader of this comment, have been aggrieved enough, and in many different ways, to know better by now:

    QUOTE: "So long as carriers are ensuring *reasonable* speed and access for all, in every region in which they operate, why shouldn't some traffic shaping be allowed?"

    Oh how internet access providers and their K-Street minions would love for you, the proletariat, to fall for that one again. Let me rephrase that same sentence/reasoning in another setting to crystallize how well that worked out for you:

    QUOTE: "So long as [health insurance] carriers are ensuring *reasonable* speed and access for all, in every region in which they operate, why shouldn't some traffic shaping (a.k.a. rationing or tiered pay-for-play access) be allowed?"

    Hmmm. That one work out pretty *reasonably* over the last several decades, didn't it?

    Let met tell you something: If money and K-Street lawyers descend on Congress to decide what you and I must subjectively accept as "reasonable speed and access for all", not to worry... I'm sure you'll find that any one of the numerous cable internet providers that service your home or apartment, will provide a better deal.

    When I was young back in the day, maybe I too would have taken the position this article espouses on technical argument alone. Forgive me... I too was also naive back then.

  • Report this Comment On August 25, 2010, at 5:22 PM, nyceyez wrote:

    For those of us who've been designing mission critical centralized, distributed, every other type of network-centric computing under the sun since circa 1984, when the term "The *Network* Is the Computer" was coined, let me say that there's nothing new or compelling about this article.

    But, more importantly, the article is woefully and perhaps irresponsibly, not comprehensive... for any justifying argument in favor of a tired and/or rationed internet must, of necessity, also address the risks of predatory and monopolistic behavior. And you, the reader of this comment, have been aggrieved enough, and in many different ways, to know better by now:

    QUOTE: "So long as carriers are ensuring *reasonable* speed and access for all, in every region in which they operate, why shouldn't some traffic shaping be allowed?"

    Oh how internet access providers and their K-Street minions would love for you, the proletariat, to fall for that one again. Let me rephrase that same sentence/reasoning in another setting to crystallize how well that worked out for you:

    QUOTE: "So long as [health insurance] carriers are ensuring *reasonable* speed and access for all, in every region in which they operate, why shouldn't some traffic shaping (a.k.a. rationing or tiered pay-for-play access) be allowed?"

    Hmmm. That one work out pretty *reasonably* over the last several decades, didn't it?

    Let met tell you something: If money and K-Street lawyers descend on Congress to decide what you and I must subjectively accept as "reasonable speed and access for all", not to worry... I'm sure you'll find that any one of the numerous cable internet providers that service your home or apartment, will provide a better deal.

    When I was young back in the day, maybe I too would have taken the position this article espouses on technical argument alone. Forgive me... I too was naive back then.

  • Report this Comment On August 25, 2010, at 5:29 PM, neamakri wrote:

    Okay, so some traffic will get priority. At that time I will download some shareware program that will spoof the provider and insure that MY e-mail gets priority over yours.

    Do you see the complications?

    On another topic, I suggest that e-mails cost extra money, say 1/10 cent each per delivery. So I would pay another 25 cents per month, while spammers would be driven out of business ~ I love this idea!

  • Report this Comment On August 25, 2010, at 7:06 PM, teebeecan wrote:

    You sound so very sure of yourself. But what worries me, with the end of old fashioned line phones and digital cell phones, what happens if (a not so big If) the entire Internet is shut down by some countries who are working on being able to do just that

  • Report this Comment On August 25, 2010, at 11:59 PM, ninthdwarf wrote:

    Hey Neamakri.. Bad idea. VERY, VERY simply.

    Spammers run things call bots.

    Bots spoof mail. Some spammer will spoof your email address and you will get the bill. (1/10 of a cent x 1,000,000.. no thanks.)

    Net neutrality is a good thing. I can only get 1 ISP where I live. Now they decide where I can go and what I can do?

  • Report this Comment On August 31, 2010, at 1:20 AM, chaz572 wrote:

    Tim, you should listen to @duranliam and @TMFShirKi. They're spot on, and I echo their sentiments.

    However, you've hit upon a very important point. "either we consumers will adopt QoS equipment to manage VoIP calls and streaming in our homes and offices, or connectivity providers will do it for us". That's it exactly -- they want to do it for us, and charge the content providers for it. That's what the NN camp can't allow, as it throttles the baby of new services and new disruptive business models in the crib. But if WE, the consumer, the end user, adopt QoS, and insist that we, and ONLY WE be charged for it, we remain in control, and NN principles get upheld.

    Yes, VoIP and streaming video should be prioritized. But they should be prioritized because I, the end customer, have asked for them to be so, and am willing to pay a little extra for the priviledge. NOT because my ISP has cut a deal with a certain VoIP provider or streaming video provider (or are such themselves).

    Traffic shaping should be allowed -- at end user request only. Never at the behest of the business objectives of the ISPs.

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